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Saturday, December 8

9th Dec - Weekender: The World

This weekend’s edition of “The World” is heavy on Europe: Italy is about to have a change of leadership, some good ones on TARGET2, Federalization of Europe-articles, Britain’s possible exit. Articles on China concentrate on the leadership change and what this might mean for the future.

Previously on MoreLiver’s:
7- Dec US Close Payroll monster
7-Dec EU Open US Payroll day

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Brussels blog round up for 1 – 7 December: Romania heads to the polls, Spain’s Catalonia conundrum, and who will replace Juncker? europp / LSE

Juncker Pledges to Escape Europe’s Call — AgainWSJ
Who will succeed Juncker as eurogroup chief?Brussels blog / FT

Cartels, Europe’s shadowy offspringDer Tagesspiel / presseurop
They sell cement, televisions or coffee. They drive up prices and cost consumers billions. Cartels act illegally, and yet seemingly having nothing to fear. In Europe, it turns out, price-fixing by cartels is a mere misdemeanour, like a traffic violation.

Gianni Pittella: “It’s time to turn the page on austerity”presseurop
On 29-Nov, the Commission on Economic and Monetary Affairs of the European Parliament approved the assembly's position on the supervision of the European banking system. This position will serve as the basis for negotiations with the Member States over the text on the banking union to be adopted by the Council of Finance Ministers on December 4th. It's an issue that the Vice-President of the Parliament, Gianni Pittella, has followed closely.

Europe is now stuck in a fiscal trap, brought about by the failure of orthodox economics to provide an effective strategy for economic growtheuropp / LSE

Germany and the euro crisis: Slow, but popularThe Economist

Euro blueprint gives Brussels economic sovereignty over membersThe Telegraph
Eurozone countries would lose the right to set their own budgets and end up surrendering economic sovereignty to Brussels under a blueprint to “complete” the European Union’s single currency.

The False Promise of a Eurozone BudgetProject Syndicate
The US monetary union is frequently said to work much better than Europe's because a large federal budget smooths the impact of shocks to individual states; so the eurozone, it is claimed, should have its own budget to provide similarly automatic insurance to its members. But this argument misreads the US experience.

(audio) Political union and its discontentsLSE
The euro crisis has dealt a powerful blow to the EU’s political system. Many European leaders have been ousted, more radical parties are becoming more powerful, and questions are increasingly being asked about the legitimacy of the European Union. European leaders find themselves trapped between the need for a more integrated Europe and the demands of voters: the necessity and impossibility of "more Europe". (direct mp3)

A genuine monetary union?bruegel
Barroso last week proposed a roadmap setting out how to transform Europe’s current set-up into a better-functioning monetary union. The paper has two major weaknesses, but it makes three very good and ambitious points.

Eurozone needs a 'shock absorption' fund – euobserver
A eurozone-wide 'shock absorption' fund should be created to assist countries in economic difficulty, according to a paper that will take centre stage at next week's EU summit.

The euro hokey cokeyThe Economist
When European Union leaders gather in Brussels on December 13th to ponder the future of their club, they will have two problems uppermost in their minds. How far do the 17 members of the euro zone, the euro “ins”, need to integrate to overcome their existential crisis? And how should the ten “outs” accommodate the emerging giant in their midst?

Britain's future: Goodbye EuropeThe Economist
A British exit from the European Union looks increasingly possible. It would be a reckless gamble

Britain and Europe: Making the breakThe Economist
How Britain could fall out of the European Union, and what it would mean

Tony Blair: Britain’s European DestinyProject Syndicate
Europe has disturbed and divided British politics for years. Now mainstream politicians from the governing party are openly making the case for Britain leaving the European Union, or radically changing its relationship with it – which may amount to the same thing – with the sympathy of some of our nation’s leaders and far wider support among the public.

Italy’s next prime minister: Life after Mario?The Economist
It is just over a year since the technocratic Mario Monti took over from the clownish Silvio Berlusconi as prime minister of Italy. He has accomplished much.

Monti’s medicineThe Economist
Mario Monti has restored Italy’s credibility but much more must be done to restore its fortunes

Great Graphic: Italy's ChallengesMarc to Market

Monti to Meet Italy President as Parties Push for ElectionsBB

Italian Bonds Decline as Berlusconi Threatens GovernmentBB

Berlusconi's Senators fire warning shot across Monti's bowOpen Europe

Politics, Not Policy, Are Driving Italy to an Early VoteWSJ

Italy PM Monti says he will resign when budget passedReuters
Italian Prime Minister Mario Monti announced on Saturday that he intended to resign once next year's budget is approved in parliament after Silvio Berlusconi's party withdrew its support for his technocrat government this week.

Italy's Technocratic Government Coming To An End: Goldman's Mark-To-Mario GambitZH

Speech Mario Draghi: A central banker’s perspective on European economic convergenceECB

Majority of ECB Governing Council Said to Back Rate CutBB

Interpreting TARGET2 balances BIS
The increase in the TARGET2 balance for the Bundesbank has led to a debate in Germany about the appropriate interpretation and policy response, if any. In this paper we review the evidence for the current account financing interpretation, and find it wanting in explaining the data in 2012. BIS international banking data, by contrast, point to the importance of TARGET2 balances as a symptom of a reduction by core European banks of credit previously extended to borrowers in peripheral Europe. These same data suggest that banks headquartered outside the euro area, particularly UK banks, boosted TARGET2 balances by hedging redenomination risk. As such, TARGET2 balances reflect not only concern regarding actual credit exposures but also potential currency exposures.

Understanding TARGET2OENB (pdf)

What Drives Target2 Balances? Evidence From a Panel AnalysisSNB (pdf)

Could two platinum coins solve the debt-ceiling crisis?Wonkblog / WP
Platinum Coin EasingPragCap
Trillion dollar platinum coinEconbrowser

China's Economy "Bottoming Out"? - Not So Fast!ZH

Euro Lessons for East AsiaProject Syndicate

From Bubble to Muddling Through?NYT

New Leaders: New Attitude?The Diplomat

China's Addiction to Growth by InvestmentEconmatters

The New Shape of China’s EconomyProject Syndicate
China’s leadership transition attracted global attention in 2012, and deservedly so, given the country’s global significance. But, more important, strategic transformations now underway seem certain to influence its future pattern of growth.

Red Carpet Roll-Up: China’s New Do’s and Don’ts for Top LeadersWSJ

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